November 4, 2011

Just when you thought your tax return could not get any more complex...

Guess what? Reporting your capital gains and losses is going to get a lot more complicated. You may be filling out up to four forms, a schedule D plus up to three Form 8949's. New basis reporting rules went into effect this year. All of your stock, bond and mutual fund sales will be reported on Form 8949 with the totals flowing to schedule D. A separate 8949 will be needed for each of three types of transactions.

  • Sales reported by a broker on form 1099-B with basis reported.
  • Sales reported by a broker on form 1099-B with no basis reported.
  • Gains and losses where no 1099-B is received.
The IRS will now be able cross check cost basis information in their database with cost basis reported on all tax returns. In the past they could only cross check gross sales proceeds.

Remember: I am only the messenger... don't shoot the messenger!

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.